June is the month of franc borrowers?

Over the past month, the franc’s exchange rate against the zloty increased by almost PLN 0.16, to a level slightly above 3.22. Following him, the installment of the mortgage taken in Swiss currency increased.

For example, an installment of 500 francs went up by over 79 zlotys, to the level of about 1611 zlotys. There is hope, however, that in June borrowers in debt in the Helvetian currency may catch some breath.

Swiss GDP data released yesterday

Swiss GDP data released yesterday

Were worse than expected. In addition, information appeared on the market indicating that Greece would receive additional financial assistance and that its debt would not be fully restructured.

It is important because in May it was on the wave of good results of the Swiss economy and investors’ concerns about the development of the debt crisis in Euroland that the franc was at a record high level against the euro and was the most expensive against the zloty since February 2009 (27 May maximum CHF exchange rate / PLN 3,2745).

GDP data postpone the rate hike and take away some of the franc’s strength
On May 31, it turned out that in the first quarter of this year. the Swiss economy grew at a slower pace than previously thought.

In January-March, the country’s GDP increased by 2.4% on a year-to-year basis and by 0.3% on a quarter-on-quarter basis. The average forecast indicated that in Q1 this year. compared to the fourth quarter of 2010, this increase will be more than twice as high and will amount to 0.7%.

These data reduced the probability

bank

That the central bank of this country may decide to raise the level of interest rates at its next meeting on June 16, which was expected by 22% (5 out of 23) of economists before the publication of this information by the Good Finance agency. Our opinion is not altered by today’s morning retail sales reports for April and the PMI index for the manufacturing sector for May, which were clearly better than expected and triggered another very strong increase in the franc price.

We also do not think that the factor prompting the SNB to tighten monetary policy would be the increase in property prices observed in Switzerland. According to data from Wueest & Partner, in 2010 single-family house prices increased by 4.7%, and in the Geneva region alone by 12%.

The scenario of no rate hike in June (and perhaps also in September) is not only supported by GDP data, but also by the fact that a possible increase in the cost of money could lead to another wave of strengthening the Swiss currency, and yet as a result of a very strong franc , inflation in Switzerland is virtually absent. In April, consumer price growth amounted to only 0.3% in annual terms, and with such appreciation of the national currency and, as can be seen with the slowing GDP growth, deflation risks may appear at any moment.

Dismissing the prospect of interest rate increases

Dismissing the prospect of interest rate increases

In Switzerland is good news for all Polish borrowers in debt
Swiss currency. Firstly, the increase in interest rates on their liabilities by banks may occur later than previously thought. Secondly, one of the two factors is also disappearing, on which the franc has appreciated strongly in recent months, including the zloty. Despite the current calming down, we are still afraid of the impact of the broadly understood Greek factor on the franc’s rate.

Home loans in franc in Poland:

  1. According to the data of the Polish Financial Supervision Authority, at the end of March this year. the value of housing loans granted in the Swiss currency was PLN 142.745 billion, and its share in the value of all housing loans granted was 52.9%.
  2. according to the Polish Bank Association, in Q1 this year. the share of the value of newly granted housing loans in the Swiss currency in the value of all newly granted housing loans was equal to 6.1% and remained unchanged compared to the fourth quarter of 2010. As a reminder, in the corresponding periods of 2010, 2009 and 2008 it was respectively: 4 , 3%, 31.0% and 59.0%.